For some the association of credit unions with tackling financial exclusion has been seen as a source of growth while others argue that it threatens their sustainability. This paper argues for an approach in which the future credit union development in the UK is confined neither to tackling financial exclusion nor to an effort to attract a diversified membership. Rather, it proposes an approach based on progressive universalism in which unions offer services open to all while focusing additional help on those sidelined by mainstream financial services. This is illustrated with examples from Wales to show how credit unions can overcome the tension between tackling financial exclusion and achieving sustainability.

Considering the increased role for social policy since 1997 in the areas of financial inclusion and the financial crises of Farepak and Northern Rock, this paper explores the role of credit unions in provision of financial services. Drawing upon recent research in Wales, the authors explore the different routes to diversification developed by Welsh credit unions to help financially excluded individuals avoid use of sub-prime lenders. This analysis of credit union development highlights the lessons to be learnt from each strand of diversification before considering the implications of these findings on the wider, UK, credit union movement.

This article can be found in Research, Policy and Planning (2008) 26 (2) pp. 123-134 with potential access here